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Nationalistic capitalism and the food crisis

Different countries have divergent approaches to international trade, and these are changing the way food is bought and sold. As world leaders meet in Rome this week to discuss soaring prices, C Paskal considers China’s approach.

There is global concern over the security implications of high, and rising, food prices. Most of the concern revolves around social unrest, but another factor to consider is the differing national responses to securing food and other increasingly scarce resources. Some countries may decide to let the market set the prices, while others are more active in ensuring stable prices over the long term. China, for example, needs affordable food for its population for the sake of domestic stability. That means the government cannot simply allow the market to dictate access. As a result, the way countries like China secure their supplies in the future may change the way the global economy functions.

If high food prices were a blip, China could probably ride it out, but a quick survey of the factors that have gone into the price increases show that this will likely be a protracted crisis. (These factors include: speculation in the marketplace; the large-scale switch to fuel crops; currently productive soils degrading, flooding or drying out; crop pests and diseases moving into new areas or becoming more virulent in old areas; global population increases; the spread of urban and industrial development into farmlands; the rising cost of fuel, transport and fertilizers; and increasing extreme weather events, such as the floods the UK saw this past summer and the 2008 winter snow storm that lashed China).

The end result is that between March 2007 and March 2008, the price of rice has risen 74%, soya (a primary protein for many) has increased 87%, and wheat has climbed 130%. There have been deadly riots in Haiti, protests in Mexico, demonstrations in Italy, unrest in Indonesia over biofuel crops displacing other land use, and difficult times for consumers in China. The Chinese government, worried that rising food costs could add to civil unrest, have already increased food subsidies to the traditionally most “active” group, the students. Other nations have put in place food export restrictions and price controls.

Conventional wisdom states that as crops stagnate or decline and populations increase, those in the developing world will be hardest hit. While this may be true to some degree, China, for one, is working towards creating a major geo-economic shift that will help it secure supply of various strategic essentials, including food.

Typically, countries have two parallel economic policies, a domestic one and an international one. For example, when it comes to its domestic market, the US may tend towards subsidies, especially in areas like agriculture, but internationally it pushes for free markets and open access.

Conversely, domestically China is a bit of an economic “Wild West”, but internationally most major Chinese companies work with the Chinese government (sometimes at a loss) in order to advance national strategic interests. When it comes to international deals, China practices capitalism, but it is nationalistic capitalism.

Globally, this move towards nationalistic capitalism is increasingly on show in the energy sector. Outside the west there is a growing movement toward effectively nationalising fossil-fuel resources in countries like Russia, Venezuela, Bolivia and elsewhere. Oil and gas supplies are tremendously potent political tools. Countries that practice this sort of nationalistic capitalism are much more influential on the world stage than they might be otherwise.

Countries practicing nationalistic capitalism can sign nation-to-nation package deals that cut out the open market completely and overtly link much-needed resources to wide-ranging deals, including military equipment. This is what China has done in Sudan, where it has traded weaponry, training and infrastructure aid for fossil fuel. As a result, China secures oil before it reaches the market.

In an era of food-supply scarcity, it is only logical that crops are included in nation-to-nation deals. For example, one would expect China to add food crops, or farm land, into its growing number of arrangements with African nations, which could explain part of China’s support for Robert Mugabe in that potential breadbasket, Zimbabwe (one report states that China has already received rights to farm 250,000 acres, or 1,000 square kilometres, of corn in southern Zimbabwe). Already in countries such as Laos, Congo, Indonesia and Cambodia, Chinese companies are farming products that will go straight to the home market (sometimes using Chinese labour), and the Chinese government is exploring making the purchase of farmland in foreign countries central government policy. What that means globally is that large quantities of wheat, corn, rice and other crops will never make it to the open market.

In this new reality, countries in which policymakers don’t have control over strategic assets (oil, gas, uranium, shipping lanes and, increasingly, water and crops) are potentially at a geopolitical disadvantage when it comes to trying to out-negotiate countries practising nationalistic capitalism. This is not a statement on the relative morality of varied economic approaches. It is just a statement of the obvious. A Russian government that has the ability to cut off energy supplies to Europe must be taken much more seriously than one that simply gets a drilling fee from transiting multinationals. In an increasingly shifting geopolitical world, it’s a very big negotiating advantage indeed.

Countries that believe the market is always right are stymied by this turn of events. Just before the 2006 G8 summit, Canadian prime minister Stephen Harper spoke for his side when he said, “we believe in the free exchange of energy products based on competitive market principles, not self-serving monopolistic political strategies.” The problem is, an increasing number of national governments don’t see what’s wrong with being self-serving -- and that includes securing food supplies.

C Paskal is an associate fellow at Chatham House and adjunct faculty in the Department of Geopolitics, Manipal University, India

Food security begins at home

China has every right to think about food security, but I would have more sympathy for this policy if China had taken more care of its own productive land. Chinese people boast about how ecologically sensitive and "harmonious" Chinese agriculture is, but the historical record shows that the Chinese have steadily turned a once lush and fertile land into desert -- and more recently, polluted it with chemicals, built on it and generally trashed it. If China is serious about food security, isn't it time the Chinese began to take care of their own land instead of moving out to Africa to destroy other peoples' fields

overstated

I am not an expert of agriculture policy, so I don’t know whether buying of land overseas to produce food for export to China is sensible or not, but what I do know is that probably one thing can always get attention if it has something to do with China. Please have a look of this article[1] from a South Korean newsphttp://www.grain.org/nfg/?id=577aper, which says Japan has steadily prepared for food security by buying 12 million hectares of croplands around the world, from Southeast Asia and China to South America, three times the size as on its mainland. It also says South Korean’s overseas croplands is negligible in comparison, a few hundred thousand hectares of croplands, admitted by South Korean’s Ministry of Agriculture and Forestry, so it established an Overseas Agricultural Development Forum mid-February in an effort to cultivate croplands overseas. But apart from its own website, the only other report around this I can find is in this article[2] from an NGO called “grain”, in which you can see it is not a unique practise, if not common.If you prefer Chinese, you can read article[3].
[1]http://english.chosun.com/w21data/html/news/200803/200803040011.html
[2]http://www.grain.org/nfg/?id=577
[3]http://www.chinadaily.net/hqzg/2008-05/14/content_6683867.htm

Overstated cntd

However, I don’t think it is a “boast” given that China feed about 20% of world population by 8% of world land, i.e. 40% of world average in land possession and remain more than 90% self-reliant. Of course Japanese and Korean may have even less land possession so they have to think about cultivating overseas croplands. The majority of land pollution and degradation are caused by industrial pollutions that coming with polluted river and acid rain, only a small share are due to agricultural operation itself, so how would one claim Chinese would “destroy other peoples' fields” by cultivating croplands? Same as FDI in China, overseas cultivating can usually bring more advanced technology and operation to the recipient countries, but in many cases the products could only be sold to local market instead of exporting back to China, because China has government controlled low food price and transportation is costly. When food is in shortage like now, it would also be both ethically and practically impossible to export food back to China from Africa when so millions people there are starving. I agree that China should have paid far more attention to protect its own lands at first place, and hope it is not too late now.

Overstated cntd

In fact, the grain does address some of the concern between market liberalisation and called to reduce the dominance of international markets and the corporations controlling them. However China cannot rely on international market for its food supply. China’s consumption on rice, the most staple food in China, is 6-7 times of the total volume of world rice trade.

Given all these difficulties and political sensitivity, I still didn’t find out how China could make “the purchase of farmland in foreign countries central government policy” and what does it mean “central government policy”. Interesting I found another article in FT in 2003, “Foreign investors eye Chinese farming”[4], certainly that article didn’t make anyone worry.

回复：过于夸张

农业用地的退化不只是由环境污染引起的，虽然污染的确是近来的一个重要的因素。但如果你用更长期的视角考察这一问题，你会发现中国的环境历史可以说是一部长达两千年的土地退化、过度开垦和沙漠化的历史。Mark Elvin的著作“The Retreat of the Elephants”是关于这一问题的最为详尽的一本书。

[该评论由Zhou Chen翻译]

re overstated

It's not the case that the degradation of agricultural land is only due to pollution, though pollution is a big recent factor. But if you take a longer view, you find that China's environmental history is one of nearly two thousand years of land degradation, over exploitation and desertification. Mark Elvin's book The Retreat of the Elephants is the most comprehensive account of it.

匿名 | Anonymous
03:4812.06.2008

牲畜浪费世界上1/3的谷物

Livestock waste 1/3 of the world's grain!

Hi All. In the first post on my blog at thisworldtoday.com I noted that of the 2100 million tonnes of cereal (grain + soy) grown - about 35% of that nutrition will be inefficiently wasted in the conversion to animals. Animals use most of the food during their lifespan and at the end of their life we can only get 10% back of what we put in.

You're Right!

Livestock not only wastes one third of the world’s grain but we also waste a large amount of energy during the process of cooking grain and vegetables . The process of boiling rice is necessary but frying vegetables is excessive when we can just as easily make salads. If it lacks salt then put it in water and drink it together. Soy sauce, vinegar and oil are just not essentials for the body and the production of these seasoning products also wastes a lot of energy and crops. We must give this up. It’s true that rice and various vegetables themselves also waste energy because the edible part is only a small part of what is produced. I suggest from now on we only plant sweet potatoes in the world's arable areas because sweet potatoes are amongst the most productive crops per acre and the inedible stalks and leaves can still be used as fodder.

Food price rises and Crisis!!!!

Asian countries being major producer and suppliers to the world are changing their economic pattern to urbanized growth resulting reduced agricultural land and its produce. Urban related economic growth thrusts agricultural land conversion to cities and building to accommodate urban population and industries. Over 20% of farm lands of developing countries have been converted to cities and buildings for the past decades and Over 50% of farmlands of villages (close to cities) got merged with cities. Check my aerial photo which clearly indicate the steep rise in urbanization. http://www.sadashivan.com/distressingfacts/id7.html

Food Crisis?

The food and hunger crisis has been around for a long time. It is only now, under the crushing weight of many problems and man's inability to solve them that a crisis rapidly unfolds. We have countries that are overfed and obese while others teem with starvation and poverty. We consume more and are less fulfilled while others die for lack of a meal.

What is to be done to enact a lasting solution to these challenges? External fixes like giving food or money provide only temporary relief.

These imbalances will continue to grow until we confront the real cause of all our problems-our egoism. We are out of balance with nature's law, the law of altruism.

With a rapidly expanding population in the world, we are overwhelmed when looking to external solutions. The problem and the solution reside in us by exiting our egoism and embracing altruism.

For a complete article on this visit http://www.kabtoday.
com/epaper_eng/conte
nt/view/epaper/7771/
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匿名 | Anonymous
04:4414.01.2010

现实

Reality

The only reason why the US subsidizes its crops is to protect the quality of their land and prevent farmers from over producing and damaging the fertile soil. In the other hand, it seems like China has a problem feeding the people because their government communist policies. Unless the Chinese people wake up and realize that you can only sustain yourself for so long with failed policies because you can only thrive for so long. Nice spin though with "nationalistic capitalism"